The harmonization of Australia’s Intellectual Property laws with overseas jurisdictions is underway. Recent changes brought in by the Intellectual Property Laws Amendment Act (Raising the Bar) 2012 on 15 April 2013 are intended to both raise standards of validity and harmonize Australian Intellectual Property law with the laws of Australia’s major trading partners, including the Europe and the United States.

In the midst of these harmonization efforts, the Australian legislature and Courts have come under increasing pressure to clarify whether or not “gene patents” are allowable in Australia. The recent Australian Federal Court decision in Cancer Voices Australia v Myriad Genetics Inc. (the “Myriad Federal Court decision”) confirmed that “isolated” nucleic acids are patentable in Australia. However, as this case has been taken on appeal to the Full Federal Court, the future of “gene patents” in Australia is far from certain.

So how will the drive towards harmonization of Australia’s patent laws accommodate the issue of “gene patents”? Will law-makers follow policy Directives in Europe permitting patent protection for “isolated” DNA sequences or the U.S. Myriad decision invalidating “gene patents”?

Will Australian law-makers follow the European approach to “gene patents”?

In Europe, the question of whether “isolated” DNA is patentable has been answered clearly in the affirmative by the European Patent Office (EPO) and the European Court of Justice (ECJ). According to Article 3 of the Directive, biological material which is isolated from its natural environment or produced by means of a technical process may be the subject of an invention, even if it previously occurred in nature, subject to meeting other patentability requirements. Article 5 provides that even if the structure of an element is identical to that of a natural element, that element may constitute a patentable invention when “isolated” from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene.

When deciding whether Myriad’s claim to nucleic acid probes comprising the sequence of the BRCA1 gene in Europe was patentable, the Board of Appeal of the European Patent Office in T 0666/05 ruled that the claim was allowable. Opponents to Myriad’s European Patent argued that the sequence of the claimed probe occurred in nature and was therefore not an invention, but rather a discovery. The Board of Appeal found the claimed subject matter to fall within Article 5 of the EU Biotechnology Directive, and to be patentable.

However, the scope of protection for “gene patent” claims in Europe is qualified, as illustrated in the ECJ decision C428/08. In this case, the Court did not permit Monsanto to enforce its claims to DNA sequences, which encoded enzyme variants showing resistance to a herbicide. Products imported into Holland containing soya meal derived from plants, which expressed the claimed DNA sequence, were held not to infringe the claims. The Court applied Article 9 of the EU Biotechnology Directive, which provides that the protection “conferred by a patent on a product containing or consisting of genetic information shall extend to all material, save as provided in Article 5(1), in which the product is incorporated and in which the genetic information is contained and performs its function.” The ECJ concluded that the patent claim only covered the DNA sequence when it performed the function for which it was patented. Thus, the scope of claims to “isolated” DNA in Europe is limited to products in which the “isolated” DNA performs its function.

The negative public perception of “gene patents” in Australia makes it highly unlikely that Australia will follow the European approach and will include specific language in Australian Patent Legislation expressly permitting “isolated” DNA to be patented. However, the Australian Courts could still follow the European trend by interpreting Australian law as allowing patent protection for “isolated” DNA sequences, providing the claimed invention meets the more stringent utility requirement, amongst others, brought into Australian law by the Raising the Bar Act 2012.

Will Australian law-makers follow the United States approach to “gene patents”?

The U.S. Myriad decision, widely reported in the media, has spelt the end of “gene patenting” in the United States as we know it. The United States Supreme Court ruled that “isolated” DNA derived from natural sources is not patent eligible. As a result of this decision, only artificially created DNA, namely, complementary DNA (cDNA), the sequence of which does not occur in the genome and which is created as a result of human intervention, falls outside of the laws of nature exclusion in the United States and is regarded as patentable subject matter. Will the Australian Courts follow this reasoning?

Australian Patent Law does not have a “laws of nature” exclusion to patentability similar to that of the United States. Moreover, despite frequent calls to amend the legislation to introduce a similar exclusion for “isolated” DNA, Australian law-makers have been persistent in their refusal to do so. Recent failed attempts include the introduction of the Patent Amendment (Human Genes and Biological Materials) Bill 2010. This Bill was intended to prevent the patenting of biological materials, which are identical or substantially identical to materials as they exist in nature. However, it failed on the two occasions on which it was raised in the Australian Parliament. Australian law-makers are therefore not expected to introduce a statutory exclusion of gene patents similar to that of the United States.

The Australian Courts could instead take the middle road. Without entering into the policy motivations for disallowing patents to “isolated” DNA sequences, or the commercial arguments as to why “gene patents” are needed as incentives, the Australian Courts could simply decide the matter by shoe-horning the arguments presented by Counsel in the U.S. Myriad decision into Australian law.

Possible rationale for how a shift to exclude “gene patents” could transpire in Australia

It would be an iconoclastic shift for Australia’s Full Federal Court, or on appeal, the High Court, to follow the U.S. Myriad decision and decide that an isolated naturally occurring DNA segment is a product of nature and therefore is not patentable subject matter. Nevertheless, that is what has happened in the United States and the judicial reasoning in the U.S. Myriad decision merits serious consideration. Any future decisions by the Full Federal Court, or the High Court, invalidating “gene patents” would both set a new precedent and harmonize Australian case law with that of the United States on this issue.

In Australia, an invention must be “a manner of manufacture” within the meaning of Section 6 of the Statute of Monopolies to be patentable. To interpret what is meant by “a manner of manufacture”, the Australian Federal Court in Cancer Voices Australia v Myriad Genetics Inc. turned to the most authoritative decision on this patentability requirement, namely, the “National Research Development Corporation v Commissioner of Patents” case (the "NRDC case"). In the NRDC case, a “manner of manufacture” was explained as being an “artificially created state of affairs”. The focus of the inquiry could therefore be described as questioning not whether a claimed product per se is newly created, but rather, whether or not the state of affairs in which the claimed product exists has been artificially created. Relying on the NRDC case, the Australian Federal Court regarded “isolated” DNA as existing in an artificially created state of affairs by virtue of its isolation from the cell.

In comparison, the U.S. Myriad decision noted that “… a naturally occurring DNA segment is a product of nature …” and that “Myriad did not create anything”. Although not strictly in line with Australian law, these statements may be viewed as highly relevant to an inquiry under Australian law, when applied to the nucleic acid claims under consideration before the Australia Courts. Viewed in this framework, the argument that genomic DNA, in which nothing new has been created, could be argued as not being artificial and thereby not meeting the manner of manufacture requirement. Such an argument could be considered as being in line with the NRDC case.

The question of patentability of “gene patents” remains very much a live issue in Australia. Despite recent attempts to harmonize Australia’s intellectual property legislation with that of the United States and Europe, the divergent case law approaches of these jurisdictions to the issue of “gene patents” has complicated the task.